I’m So Bored With the USA: Things Will Only Get Worse 

 

 

“I’m in the hi-fidelity first class travelling set
And I think I need a Learjet” 

 

This is an unscripted continuation of last weeks’ “Redistribution, Revolution, and the Ancien Regime”. 

 

In that piece, I compared 18th century France, and 20th century Russia with today’s uber class, who are above governments, above tax rules, and possibly above the law too. Whilst the majority have to play by the rules, the uber class sets the rules! 

Within this I highlighted how Trump hadn’t been able to deliver his electoral pledge of defeating the cost-of-living crisis, but had managed to squeeze in-time to fill his own pockets. 

To ensure there is no conflicts of interest, Trump’s eldest sons, Don Jr and Eric, are now running the family business. According to Eric, there is a “huge wall” between this moneymaking and their father’s position. “Nothing I do has anything to do with the White House.”  

In his first term, Trump pledged that there would be no family business deals abroad, a stance that has been reversed. Financial disclosures show that whilst his stakes in the family’s businesses are held in a trust, profits still flow to him. 

Kristofer Harrison, a senior foreign policy official under President George W Bush who now runs an anti-corruption organisation called the “Dekleptocracy Project”, is among those accusing the Trumps of operating a “pay to play” system that benefits those who do business with the president’s family. Such an approach could be manipulated, he said, especially by rival powers such as China. He said: “Trump has made authoritarians’ wildest dreams come true.” 

The rulers of the Gulf’s petro-monarchies are longtime customers, who see no distinction between their states’ interests and their families’. 

In the last year, the Trumps’ business in the region has accelerated. A golf course in Oman; Dubai apartments going on sale. Chuck Schumer, the Democrats’ leader in the Senate, said Trump’s trip to the Middle East in May seemed “less like a presidential visit and more like a personal business venture”. 

In Qatar, a golf resort deal with a state company in April was followed the next month by the gift of a “flying palace” for Trump to use as Air Force One. Coincidentally,  in October he committed US troops to defend the state.  

In Saudi Arabia, where new golf and hotel projects are already under way, news in November of yet another potential venture – in a development overseen by the crown prince, Mohammed bin Salman – emerged days before Trump agreed to sell F-35 fighter jets to the kingdom. 

Ben Rhodes, who was Barack Obama’s deputy national security adviser, argues that the Trumps’ approach amounts to “nothing more than an old-fashioned grift tethered to a superpower”. 

“It’s incalculable what damage we are now seeing. Corruption, is now the norm in geopolitics.” 

Elsewhere, there is The Trump Tower Belgrade, a $500m (£378m) hotel and apartment building, and further property ventures in Romania and Albania. Further afield, there is a $1.5bn golf resort in Vietnam. Villagers, whose farms are making way these developments will receive as little as $12 a square metre and some rice in compensation. 

Ironically, in April, one month before groundbreaking on the golf course, Trump had imposed a 46% tariff on Vietnamese imports. In July, Vietnam became the second country, after the UK, to reach a tariff deal with the US, more than halving its rate to 20%. Surely, a coincidence!! 

Despite all of this real estate development, Trumps’ big win has been his family’s cryptocurrency, USD1, part of World Liberty Financial which was launched two months before his re-election, with the claim it would help make “America the crypto capital of the world.” 

 

‘Despite all of this real estate development, Trumps’ big win has been his family’s cryptocurrency, USD1’

 

Four months into Trump’s second term, World Liberty announced that USD1 had been selected for a gigantic transaction. Binance, the world’s biggest crypto exchange, was selling a stake to UAEs state-owned fund, MGX. The $2bn price could have been paid in dollars. Instead, Binance would receive two billion freshly minted USD1. 

Because USD1 is a stablecoin – crypto pegged to a real currency – World Liberty holds one dollar for each token it issues. It makes money from the interest and investment returns on these reserves. The $2bn jump in the reserves from this one deal means that Trumps’ company could make tens of millions annually. 

Another remarkable coincidence centres around Binance’s Chinese-born founder, Changpeng Zhao (“CZ”). CZ  had been sentenced to four-months in prison for violating US AML laws against money. Prosecutors said that allowing sanctioned Russians, al-Qaida and assorted others to move illicit funds over Binance – which paid a $4bn fine – had caused “significant harm to US national security”. 

Once released, CZ returned to the UAE, with concerns that his criminal record would be an obstacle to re-establishing Binance in the US. His application for a pardon coincided with news of the $2bn deal with USD1. Zhao subsequently posted on X: “Deeply grateful for today’s pardon and to President Trump for upholding America’s commitment to fairness, innovation, and justice.” 

As with 18th century France and the Tsar’s Russia, where corruption was endemic in the royal courts, this appears to be in the situation in the  court of King Donald. 

We are fortunate that the UK has no such issues; Starmer’s few suits and concert tickets, and even Johnson’s redecorations are meagre pickings when compared to Trump. 

 

‘where corruption was endemic in the royal courts, this appears to be in the situation in the  court of King Donald’

 

However, there is the Royal families tax affairs offensive, E.G., they are exempt IHT. 

That aside, in 2023, the Duchy of Lancaster made £27.4 million for the King, whilst the Duchy of Cornwall raised £23.6 million for Prince William. The duchies, with a combined worth £1.8 billion, are their personal property, and exempt from corporation tax and capital gains tax. 

In addition, they enjoy a tax-free sovereign grant, which for 2025-26 is £132.1 million, funded by the taxpayer – which pays for formal royal duties, palaces and official households. 

 

However, Channel 4’s Dispatches and The Sunday Times have uncovered some facts that suggest both duchies are making money from charging the NHS, schools and charities for using their land: 

 

• The NHS pay the Duchy of Lancaster £11.4m over 15 years for a warehouse to store ambulances in. 

• The Ministry of Justice is paying the Duchy of Cornwall £37m to lease Dartmoor prison for 25-yrs. 

• The Army pays the Duchy of Cornwall to train on Dartmoor and the Navy pays to moor and refuel its fleet. 

• The King will also make £28 million from windfarms and the Duchy of Lancaster has a feudal right to charge for cables crossing the foreshore. 

 

Whilst the Royals make-out like the “robber-barons of yesteryear, the majority of us are struggling. 

“Black Friday” has become the traditional big, pre-Christmas spend-up, however, this year, research by the monitoring company MRI Software, showed that visitors to all UK shopping destinations were down 2% on Friday and 7.2% compared with the equivalent days last year. 

This might be partly explained by the fact that most Black Friday sales are now online, the picture there wasn’t great, with sales down heavily on Thursday but up on Tuesday, according to the online retail association IMRG. 

“The cost of living squeeze appears to be weighing on overall activity,” said Jenni Matthews from MRI. 

Some of this might be explained by the incipient creep up the social spectrum of inequality, exacerbated by both the GFC and the cost-of-living crisis. 

 

‘Whilst the Royals make-out like the “robber-barons of yesteryear, the majority of us are struggling’ 

 

Many commentators assumed that post the GFC the majority of the public, comprising of contented consumers and property owners, would emerge unscathed. Interestingly, in his speech at the 2009 Labour conference, the then PM, Gordon Brown said: “When markets falter and banks fail, it’s the jobs and the homes and the security of the squeezed middle that are hit the hardest.”   

Today, many of those Brown talked of are suffering from an uncertainty that is eating into their once secure lives. As a result, they are part of an electoral coalition that is resentful of the failure of mainstream politicians, who seem unable, or unwilling to address their problems . 

According to the OBR, the post-GFC years of wage stagnation, will be followed by meagre gruel; they estimate that households’ average disposable income will grow by only 0.5% p.a. between now and 2030. The knock-on effect is that their children are growing up in an even more harshly competitive economy and society than they did, meaning that as they come of age, the squeezed middle will continue expanding. 

A symptom of this squeeze is the chancellors’ budget decision to freeze tax thresholds.  

Many in the “middle” have salaries of £50,000; this no longer denotes affluence, and they will be amongst those hit hardest by the freeze.  

Ruth Curtice, the chief executive of the Resolution Foundation, said: “All but the top 10% of the income distribution are worse off because of opting for threshold freezes over [income tax] rate rises.” By 2031, C.25% of taxpayers will have some of their earnings taxed at the “higher” 40% rate.  

In addition, the middle-class make more use of the NHS, public transport, public libraries, local swimming pools and public parks, and prioritise education, all of which are being impacted by central and local government spending cuts. 

It isn’t just Labour that is failing these families, the Tories were in government from 2010-2024. In 2018, I penned a piece for another website entitled “Hunting for yield in the recession that supposedly never happened”, which I referenced last year in “The Recession That Never Was”. My point was simple, post-2008 many have experienced a stealthy recession. Economists were quick to talk-up recovery, but for many it was “L” shaped. 

However, like most issues this was long in the making. Ultimately, 40-yrs of supply-side economic theory undermined the principles of fairness, resulting in the ties that bind society into a functioning whole unravelling. 

A recent work by the Nobel laureate Joseph Stiglitz, highlights the yawning gap between rich and poor as a human-made crisis which is destroying politics, society and the planet. 

This has become a global issue; 90% of the world’s population now live under the World Bank’s definition of “high income inequality”. The US sits just below that threshold and is the most unequal country in the G7, followed by the UK. 

 

The report contains some interesting data, for example: 

 

• The richest 1% captured 41% of all new wealth since 2000,  

• Whilst the bottom half gained just 1%.  

• On average, someone in the global top 1% became $1.3m richer; a person in the poorest half gained $585.  

• The uber-rich account for a disproportionate share of carbon emissions, worsening climate risks borne by the poor 

 

Elsewhere, the report shows that 2.3 billion people are now moderately or severely food insecure – 335 million more than in 2019. Wealth concentration far outstrips income concentration, with billionaires’ assets worth one-sixth of global GDP. Frighteningly, billionaire wealth is rising almost in lockstep with global food insecurity. 

Stiglitz argues that extreme inequality is a policy choice, caused by specific economic, political and legal decisions rather than by “globalisation” or technology. Financial deregulation, weakening labour protections and privatisation all aid rising inequality, as does cutting corporate and top income tax rates.  

 

‘90% of the world’s population now live under the World Bank’s definition of “high income inequality”’

 

He rejects the pro-market argument that inequality is good for growth. As the column has written so-many times, there has been no trickle-down 

The report stresses that the most dangerous consequences are political, with highly unequal countries seven times more likely to experience democratic backsliding or authoritarian drift. 

Prof Stiglitz’s proposes a blueprint for change, within the G20’s first-ever inequality report, endorsed by key European, African and middle-income nations, with solutions reminiscent of the 1944 Bretton Woods settlement. The report proposes structural changes, including the rewriting of intellectual property rules as well as trade and investment treaties, a reform of global lenders, and an update of tax systems as well as sovereign debt arrangements. 

Stiglitz  highlights the fact that inequality leads to the destruction of democracy in favour of authoritarianism, a themes that has underpinned this column. 

 

‘immigration isn’t the problem it’s inequality, stupid!’ 

 

A direct result of inequality is the rise of authoritarian, populist leaders. They shout louder for longer, but are nothing more that empty vessels. Their appeal centres around their ability is to simplify everything, and finding something and, or, someone to blame. Immigration being an easy target. 

What is more distressing is the fact that mainstream parties, unable to face the truth, have joined the populist bandwagon. In doing so, they achieved nothing other than making hitherto unacceptable polices mainstream, therefore legitimising extremism. 

 

As I have written so often; immigration isn’t the problem its inequality, stupid! 

 

“Yes, and how many times can a man turn his head
And pretend that he just doesn’t see?” 

 

 

  

‘Really there isn’t much of an editorial to this piece, which covers the familiar theme of inequality.

Within this I have highlighted how the Trump family appears to be financially benefiting from his presidency. Optically, there appears to be Chinese walls and trusts to overcome conflicts of interest.

The problem with Chinese walls is that things can grow on them. There does seem to be some remarkable coincidences between his political and business decisions.

At some point, the lid will blow off the top, his MAGA supporters will realise they have backed the wrong horse. Of course, that may not matter if democracy has been overturned by an authoritarian government. Still that didn’t help either King Louis XVI, or Tsar Nicholas II.

Domestically, it is finally being recognised that the middle-class have been continually squeezed since the GFC. I remember, three Christmas lunches ago, having this conversation with one of your former colleagues. He couldn’t or wouldn’t accept it; it would be interesting to hear his comments today.

Later this week, in a follow-up we will look more at immigration and what it might mean under a right-wing government.

Lyrically, we look at inequality, starting with Pink Floyd’s “Money, and ending with Dylan’s “Blowin’ in the Wind”.

Enjoyment, ahh yes, I remember that!

Philip.’

 

@coldwarsteve

 

Philip Gilbert is a city-based corporate financier, and former investment banker.

Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s

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